Culture Secretary Jeremy Hunt today told the House of Commons he was referring News Corporation's bid to buy the remainder of shares in BSkyB to the Competition Commission with immediate effect.

The dramatic move comes as Rupert Murdoch's News Corp vowed to fight on in its battle for BSkyB today amid further falls for the satellite broadcaster's shares.

The company has withdrawn its offer to hive off Sky News as a separate company as part of its approach for BSkyB and said it was now ready to engage with the Competition Commission instead.

Culture Secretary Jeremy Hunt makes a statement in the House of Commons in London where he said he was referring News Corporation's bid to buy the remainder of shares in BSkyB to the Competition Commission with immediate effect

As analysts warned the bid was
looking increasingly likely to fail, News Corp said it continued to
believe its proposal will not lead to 'insufficient plurality in news
provision'.

It comes after Deputy Prime Minister
Nick Clegg earlier called on Rupert Murdoch to 'do the decent thing' and
reconsider his BSkyB bid.

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In an appeal to Mr Murdoch, the
Deputy Prime Minister said: 'Do the decent and sensible thing, and
reconsider, think again, about your bid for BSkyB.'

Mr Clegg said: 'Rupert Murdoch is now in town in London seeking to sort things out.

'I would simply say to him, "look how
people feel about this, look how the country has reacted with revulsion
to the revelations".'

Deputy Prime Minister Nick Clegg (right) meets with Sally Dowler (left) and daughter Gemma at the Cabinet Office in Westminster, London, this morning. The teenager's mother, Sally, said: 'We just want all the party leaders to listen to what those of us who have experience this scandal first-hand have to say.'

The move to refer the BSkyB takeover to the Competition Commission came as it was reported that
police have told the Prince of Wales and the Duchess of Cornwall that
their voicemail messages may have been hacked by the News of the World.

It was also claimed that journalists
from other newspapers in Mr Murdoch's News International stable
illegally obtained private information about former prime minister
Gordon Brown, including his bank account and his family's medical
records.

Mr Brown was repeatedly targeted by
News International papers the Sun and the Sunday Times, which accessed
details from his legal file, Abbey National bank account and his baby
son's medical records, the Guardian and the BBC reported.

Announcing he was referring the bid, Mr Hunt told MPs: 'It will mean that the Competition Commission will be able to give further full and exhaustive consideration of this merger, taking into account all relevant recent developments.'

Meanwhile, the Guardian reported that
Charles and Camilla are among at least 10 members of the royal
household warned by Scotland Yard they may have been targeted for
hacking.

A Clarence House spokesman said: 'We are not commenting on an ongoing police investigation.' Scotland Yard and News International declined to comment on the latest claims.

Mr Hunt said his decision to refer
the BSkyB bid to the Competition Commission 'will be an outcome that I
am sure the whole House will welcome'.

Labour had threatened to table a
Commons motion on Wednesday calling for the Government to take that
course of action, and senior Liberal Democrats had indicated support.

Mr Hunt said: 'The Competition
Commission will be able to give further full and exhaustive
consideration of this merger taking into account all relevant recent
developments.'

He added: 'Protecting our tradition
of a strong, free and independent media is the most sacred
responsibility I have as Culture Secretary.

'Irresponsible, illegal and callous
behaviour damages that freedom by weakening public support for the
self-regulation upon which it has thrived.'

Jeremy Hunt walking on his way to the House of Commons after announcing he was referring News Corp's proposed BSkyB takeover to the Competition Commission

The Culture Secretary was jeered by Labour as he claimed the Government was 'dealing decisively with the abuses of power we have seen'.

Mr Miliband said the change in the contents of the statement 'points to the chaos and confusion' in the Government over the issue.

'After what we have heard and the questions left unanswered, we all know it is the Prime Minister who should be standing here today,' he added.

Mr Hunt 'has been left to carry the can by a Prime Minister who knows there are too many difficult questions for him to answer.

'It is an insult to the House and to the British public.'

Mr Miliband called for the inquiry to be given powers to force witnesses to give evidence, and wanted it set up immediately.

He said: 'As soon as an inquiry is established, the tampering or destruction of any documents becomes a criminal offence.

'We already know this is relevant to the offices of the News of the World. It may also be relevant to any documents in 10 Downing Street or Conservative headquarters.'

On the attack: Ed Miliband, the Labour leader, pictured, said the Prime Minister had 'questions to answer'

Mr Miliband said the Government was
in 'complete disarray' and trouble 'all of its own making' over the
proposed takeover of BSkyB.

He accused Mr Hunt of only referring
the deal to the Competition Commission because minsters feared losing a
Commons vote on the issue on Wednesday.

'The Culture Secretary chose not to
follow the recommendation of Ofcom to refer this bid to the Competition
Commission. He has been insisting for months that he can proceed on the
basis of assurances from News Corporation,' said Mr Miliband.

'Now he has adopted the very position he has spent months resisting.'

Mr Miliband repeated his demands for
former News of the World editor Rebekah Brooks to quit as News
International chief executive.

He wanted a detailed breakdown of
what Prime Minister David Cameron was told by advisers, including his
chief of staff Ed Llewellyn, before taking on ex-News of the World
editor Andy Coulson as his director of communications.

The Labour leader told MPs: 'Are we
seriously expected to believe Mr Llewellyn, an experienced former civil
servant, failed to pass any of this information on to the Prime
Minister?

'Frankly, it beggars belief as an
explanation. This issue goes to the heart of the Prime Minister's
integrity and we need answers.'

He added: 'Unless the Prime Minister
can explain what happened with Mr Coulson and apologise for this
terrible error of judgment in employing him, his reputation and that of
the Government will be permanently tarnished.'

Mr Miliband attacked Mr Cameron's
decision to give a speech at Canary Wharf in London rather than address
the Commons today, claiming the Prime Minister was 'running scared'.

He added: 'He has failed to show the necessary leadership the country expects.'

But Mr Hunt warned the Labour leader against dismissing assurances from News Corp and News International.

Referring to Mr Miliband's decision to employ former Times journalist Tom Baldwin as his director of communications, despite allegations over Mr Baldwin's practices while working at the News International title, the Culture Secretary told Mr Miliband to be 'very, very careful not to be someone who throws sticks in glass houses'.

Mr Hunt said: 'He criticised me in his comments for being willing to accept assurances from News Corp - he was willing to accept assurances from the very same people about Tom Baldwin.'

The Culture Secretary challenged Mr Miliband to 'show some humility', pointing out Mr Miliband attended Murdoch's summer party and 'failed to bring up phone hacking'.

Mr Hunt defended his actions over the BSkyB deal, saying: 'I have at every stage in this process followed the procedures laid down in the Enterprise Act 2002.

'Not only that but I have done more than those processes require because at every stage I have asked for independent advice from the expert media regulator Ofcom and, after careful consideration at every stage, I have followed that advice.'

He called for a revamped relationship between MPs, press barons and reporters, saying: 'We have all failed - politicians, journalists and media owners - and we must all work together to put the problem right.'

He added: 'If we are going to tackle this very serious cancer we have seen in our society in the last week, we need to have responsible attitude from all sides of this House.'

Rupert Murdoch returning to his London apartment this morning accompanied by his blonde personal trainer (right). Deputy Prime Minister Nick Clegg today called on Mr Murdoch to 'do the decent thing' and reconsider his BSkyB bid

Meanwhile, Metropolitan Police
assistant commissioner John Yates denied ever being asked to review his
force's original phone-hacking investigation in 2006, which resulted in
Goodman and private investigator Glenn Mulcaire being jailed.

In a letter to the Commons Home
Affairs Select Committee, Mr Yates wrote: 'From the beginning of my
involvement in this matter in 2009, I have never conducted a "review" of
the original investigation and nor have I ever been asked to do so.

'In relation to events that took
place in 2009, I was provided with some considerable reassurance (and at
a number of levels) that led me to a view that this case neither needed
to be re-opened or reviewed.'

The senior police officer also denied
he had any knowledge that Milly Dowler's phone had been hacked before
the news emerged last week.

But in the Commons Labour MPs Tom
Watson and Chris Bryant accused Mr Yates of misleading Parliament and
said his position had become 'untenable'. Using parliamentary privilege, Mr
Bryant said: 'Assistant Commissioner Yates repeatedly lied to
Parliament. Surely he should resign.'

It emerged this morning that Mr Hunt
was writing to Ofcom and the Office of Fair Trading (OFT) seeking
opinions on whether the matter could be referred to the Competition
Commission in light of revelations in the phone hacking scandal.

He also asked if the events at the
News of the World have any impact on the credibility and undertakings
offered by News Corp as part of its offer.

The personal trainer who accompanied the 80-year-old media mogul back to his flat

The move came amid the threat of a Coalition crisis, with the Liberal Democrats appearing likely to side with Labour in a Commons vote on the issue this week.

Shares in BSkyB fell sharply again this morning after news emerged of Mr Hunt's plan to speak to the watchdogs.

The shares dropped more than six per cent to around 700p, in line with the price that Rupert Murdoch's company originally proposed last July when it first revealed its interest in bidding for the outstanding 61 per cent of BSkyB.

Media mogul Mr Murdoch held talks with some of his most trusted lieutenants last night after flying in to the UK - the day the News of the World was shut down - to take personal charge of the crisis.

Among those who met over dinner was News International chief executive Rebekah Brooks - editor of the News of the World at the time the mobile phone of murdered teenager Milly Dowler was hacked.

It was reported that Mrs Brooks - who has faced sustained calls to quit but denies any knowledge of hacking on her watch - will be interviewed by Scotland Yard detectives investigating hacking and corruption claims this week.

David Cameron launched a desperate bid to kill Rupert Murdoch's takeover of BSkyB last night - finally signalling a decisive break with the media mogul.

Downing Street revealed the Prime Minister wants to prevent the tycoon buying out the television company until criminal proceedings have concluded into the hacking scandal.

Rebekah Brooks, chief executive of News International, and Rupert Murdoch leave his London flat shortly after his arrival in Britain yesterday. It was reported that Mrs Brooks - who has faced sustained calls to quit but denies any knowledge of hacking on her watch - will be interviewed by Scotland Yard detectives investigating hacking and corruption claims this week

BSKYB SHARES TUMBLE A FURTHER 6% KNOCKING £2.5BN OFF VALUE OF BROADCAST GROUP

Shares in BSkyB fell sharply again this morning after news emerged that Mr Hunt is to write to Ofcom.

The shares dropped more than 6 per cent to around 700p, in line with the price that Rupert Murdoch's company originally proposed last July when it first revealed its interest in bidding for the outstanding 61 per cent of BSkyB.

Shares in BSkyB have now fallen by 17 per cent since the phone hacking scandal blew up again last week, knocking nearly £2.5billion off the value of the broadcast group.

The deal was seemingly set to get the go-ahead after News Corp agreed to spin off the Sky News part of BSkyB into a separate business to ease some of the concern over the dominance of Mr Murdoch's companies within the UK industry.

Alex DeGroote, analyst at Panmure Gordon stockbrokers, estimates there is now only a 10 per cent chance of the deal going through.

He said: 'On Friday we cut our probability of the deal going ahead to 50:50 from 90:10 in favour. This seems very optimistic now. Our new assessment is 10:90 in favour. In other words, we believe the deal is all but dead.'

Following sharp falls last week, BSkyB stock was down a further 53.25p at 696.75p in trading today. This is lower than the 700p price that News Corp originally proposed last July when it first revealed its interest in bidding for the 61 per cent of the company it doesn't already own.

Shares in Rupert Murdoch's News Corp - parent of News International which operated the killed-off News of the World newspaper - closed down 4 per cent at $16.75 in New York on Friday.

News Corp's interests include The Times and The Sun newspapers in the UK and the Wall Street Journal in America.

Traders suggested today that what had happened at the News of the World could pave the way for the bid to be referred to the Competition Commission.

News Corp made its initial 700p-a-share approach for the 61 per cent of BSkyB it does not own last year, but independent directors of the company said the proposal significantly undervalued the business and called for any offer to be 800p a share or more.

Hedge funds were said to have built up large stakes in BSkyB in expectation of a higher takeover offer.

Some of these holdings were sold last week, it was reported at the weekend, after Mr Hunt indicated that any regulatory clearance would be delayed until at least October after he received more than 150,000 responses to the consultation document about the takeover.

That could delay the £10billion takeover bid until 2014 and the Prime Minister's aides hope it will put an end completely to the politically toxic deal, which has exposed Mr Cameron’s close links to Mr Murdoch's News International empire. It came as:

It emerged News International had a damning dossier of 300 emails showing illegal payments by the News of the World to police in 2007, but handed them to Scotland Yard only last month

Met assistant commissioner John Yates faced calls to resign after admitting he made a 'c**p decision' to ignore evidence of widespread hacking

News International chief executive Rebekah Brooks, who edited the paper when Milly Dowler’s phone was hacked, was told she will be quizzed by police under caution. She was later reunited with Mr Murdoch in a blatant show of support by the media mogul

Police sources revealed that at least nine journalists and three police officers could face criminal charges.

Last night No 10 staff were frantically trying to find a way of putting the deal 'in cold storage' before a crunch vote in the Commons on Wednesday, which could see the Tories defeated by a combination of Labour and Liberal Democrat MPs.

Senior officials hope that indicating Mr Cameron's opposition to the deal will drive Mr Murdoch to abandon his takeover plans.

No 10 yesterday sent out Cabinet ministers to encourage television regulator Ofcom to probe whether Mr Murdoch and his son James are 'fit and proper' to own a television channel in an attempt to scare them off.

Transport Secretary Philip Hammond repeated three times that Ofcom could step in 'at any time' if it 'believes there are questions about the fitness or properness' of media magnates.

The declaration of hostilities against the Murdochs, who are vulnerable to a probe since they already have seats on the BSkyB board, marks a dramatic shift in Mr Cameron’s approach to the greatest crisis of his premiership.

The Prime Minister has been heavily criticised for his failure to severe his ties to the Murdoch empire.

He
hired Andy Coulson, the former News of the World editor, as his spin
doctor to cement close links and he has also appeared compromised by his
friendship with Mrs Brooks, who lives close to his Oxfordshire home.

Until now, ministers have said Culture Secretary Jeremy Hunt's ruling on the BSkyB buyout would be delayed until September.

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But
yesterday No 10 was forced to launch a frantic damage limitation
exercise after Labour leader Ed Miliband announced he would force a vote
to postpone any consideration of the takeover until after phone-hacking
prosecutions are completed.

While
Wednesday's vote would not be binding on the Government, it would send a
strong political signal that would be hard to ignore.

Lib Dem Lord Carlile said: 'If the vote is carried, the Government will be in serious trouble if it ignores it.'

Downing
Street strategists were taking legal advice on how they could delay a
decision on the BSkyB deal indefinitely without being challenged in the
courts by Mr Murdoch.

They want to draw up an amendment to Labour's motion spelling out that the deal would be put indefinitely on hold.

A senior figure said: 'This deal is in cold storage. We want to get this sorted out before Wednesday.'

Privately Tory officials were blunt that the Sky deal has been politically damaging to the Prime Minister.

'We
always knew we were going to have to eat a s*** sandwich over the BSkyB
deal,' said one Government source. 'But we didn’t know it would turn
into a three-course dinner.'

The
climbdown began as Liberal Democrats rounded on their Coalition
partners, making clear that they would back Labour's call to delay the
Sky ruling until after any criminal actions against News International.

Lib Dem President Simon Hughes said: 'My
recommendation to my colleagues would be that we as a parliamentary
party make clear that it’s our view that the takeover should not go
ahead until the criminal investigations are completed.'

Ready to move: David Cameron could kill off Rupert Murdoch's bid to completely take over BSkyB

Mr Huhne said: 'We will obviously have to look at the details of the motion before deciding what should be done in terms of the voting.'

Mr Miliband said it was untenable for the Sky takeover to go ahead.

'The idea that this organisation which engaged in these terrible practices should be allowed to take over BSkyB, to get that 100 per cent stake without the criminal investigation having been completed and on the basis of assurances from that self-same organisation, frankly that just won’t wash with the public.'

Mr Cameron will also come under pressure this week to change his plans for two inquiries into the affair. He has announced that a judge will probe the scandal and the role of the police and that a panel of experts will consider media ethics.

But in a move that aroused fears of judges imposing limits on press freedom, Mr Miliband yesterday demanded a judicial inquiry into the whole of the media.

He said: 'I believe we should have a personal assurance from Rupert Murdoch that those illegal practices were confined to News of the World.'

MURDOCH SUCCESSION THROWN INTO DOUBT

James Murdoch walks with his father Rupert, chairman of News Corporation, to his London flat last night

James
Murdoch’s hopes of succeeding his father at the top of News Corporation
were thrown into doubt yesterday as the phone-hacking crisis deepened, writes Hugo Duncan.Rupert Murdoch’s embattled son, who is
chairman of News Corp’s News International arm, which owns the News of
the World, could be quizzed by police in the wake of the scandal at the
Sunday tabloid.Analysts and investors are now
questioning whether the 38-year-old should take over from his father
when the 80-year-old media mogul steps down.US investor Yacktman, the eighth largest
shareholder in News Corp with a 3.2pc, backed Rupert Murdoch’s
right-hand man Chase Carey.‘We would be thrilled if Chase Carey became successor,’ said Yacktman vice president Jason Subotky.News Corp faces a showdown with
shareholders at its annual meeting in October over the phone-hacking
scandal and James Murdoch’s role. Investors could try to block his
re-election to the board.It is a major blow to James Murdoch, who has been widely tipped to take over from his father following his meteoric rise.The scandal threatens to engulf the entire group – and scupper News Corp’s bid to take full ownership of BSkyB.Claire Enders, head of research group
Enders Analysis, described it as ‘the most serious political crisis in a
generation’ for the Murdochs. ‘But as a business crisis it is immense
and immensely more significant,’ she said.Investors are growing increasingly concerned about the family’s ability to lead the company out of the crisis.‘Even if the takeover does eventually go
ahead, there’s going to be a lot of volatility on the way there,’ said
one fund manager. ‘Our confidence in the ability of Murdoch to manage
this is waning fast.’Carey, chief operating officer at News
Corp, is far better known than James Murdoch in the U.S., where the
company does most of its business. He is already number two – James
Murdoch is number three.News Corp refused to comment on speculation about succession. But analysts reckon it will be difficult
for James Murdoch to take over from his father if the BSkyB deal falls
through because of the public outcry over phone-hacking.Shares in BSkyB tumbled nearly eight per cent on
Friday to close at 750p – the lowest price since February – as dealers
bet that News Corp’s efforts to buy the 61pc it does not already own
will fail.Hedge funds are nursing huge losses
having piled into the stock in the expectation that the deal would be
approved as a matter of formality. Investors are braced for further turbulence this week as opposition to the deal mounts. City sources said the Murdochs may decide to sell their entire newspaper empire in Britain – including The Times, The Sunday Times and The Sun – to keep the BSkyB deal alive.

Now Lib Dems question PM's judgment over Coulson

Questions: David Cameron has been criticised for appointing Andy Coulson (pictured) as his chief spin-doctor

Senior Liberal Democrats yesterday seized the opportunity to distance themselves from David Cameron over his decision to appoint Andy Coulson as his chief spin-doctor.

Cabinet Minister Chris Huhne said Nick Clegg had warned the Prime Minister not to hire the former News of the World editor when the Coalition was formed last year.

Both Lib Dems warned that Coulson would embarrass the Government when revelations emerged of his conduct during his editorship of the tabloid.

Coulson was arrested and interviewed for ten hours at Scotland Yard on Friday amid claims that he authorised payments to police officers.

'And it was made very clear to us that this was a personal appointment of the Prime Minister and wasn’t a government appointment, and therefore we didn’t have any standing to object to it.

‘The reality is that there were very serious risks being run there. We knew, with Andy Coulson, anybody in charge of a newspaper needs to know what’s going on, and at the very least either Andy Coulson was complicit in criminal acts or alternatively he was a very incompetent editor by the standards of Fleet Street.’

Mr Huhne accused Mr Cameron of having a ‘cosy relationship’ with News International, owners of the now defunct newspaper, while senior Whitehall sources say that Nick Clegg concluded he was powerless to change Mr Cameron’s mind. ‘It is not up to me to tell the Prime Minister who to appoint as his director of communications,’ he told a friend.

A senior Tory source hit back at Mr Huhne, saying: ‘I don’t remember him complaining about Andy when he was advising him when his marriage was falling apart.’

The Prime Minister’s aides say he will remain loyal to Coulson unless and until he faces criminal charges. ‘David thinks loyalty is important. But if it emerged that Andy had misled him you would certainly hear very strong condemnation,’ one said.

‘I just think, after
all those times having happy little drinkies with Rebekah Brooks, [he]
owes it to all of us, not least himself, to raise his game.'

- David Mellor

Last night there was growing disquiet in Tory ranks about Mr Cameron’s determination to shackle himself to the tainted Coulson.

Former Conservative minister David Mellor said the Prime Minister ‘seems to be getting all of this wrong’ and ‘has lost ground’ to Labour leader Ed Miliband. ‘I just think, after all those times having happy little drinkies with Rebekah Brooks, [he] owes it to all of us, not least himself, to raise his game,’ he added.

One MP, who is no fan of Mr Cameron’s inner circle, said: ‘There are questions of judgment, but also of character.

'Cameron likes to look after his own, but he’s quick to throw the rest of us to the wolves if we muck up. This shows his stubbornness at its worst.’

Former Lib Dem leader Lord Ashdown revealed that he told Mr Cameron he risked ‘terrible damage’ if he took Coulson onto the public payroll.

And it also emerged yesterday that Mr Cameron was given a personal guarantee by Rupert Murdoch that Coulson was safe to take on as his press chief.